Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 160762

May 3, 2006

Spouses JOSEPHINE MENDOZA GO & HENRY GO, Petitioners,

vs.
LEONARDO YAMANE, Respondent.
DECISION
PANGANIBAN, CJ:
Property purchased by spouses during the existence of their marriage is presumed to be conjugal in
nature. This presumption stands, absent any clear, categorical, and convincing evidence that the
property is paraphernal. Conjugal property cannot be held liable for the personal obligation
contracted by one spouse, unless some advantage or benefit is shown to have accrued to the
conjugal partnership.
The Case
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the
November 22, 2002 Decision2 and the September 17, 2003 Resolution3 of the Court of Appeals (CA)
in CA-GR CV No. 60939. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the Decision appealed from is hereby REVERSED and SET
ASIDE. The Sheriff's Certificate of Sale dated August 12, 1981 and the Final Sheriff's Certificate of
Sale dated August 26, 1982 are declared NULL and VOID."4
The CA denied reconsideration in its September 17, 2003 Resolution.
The Facts
The undisputed factual findings of the CA are as follows:
"Involved in the suit is a 750 square meters (sic) parcel of lot located at Res. Sec. 'K', Baguio City,
registered in the name of Muriel Pucay Yamane, wife of Leonardo Yamane, [respondent] herein,
under Transfer Certificate of Title No. 12491.
"As a result of a motion for execution of a charging lien filed by Atty. Guillermo F. De Guzman in Civil
Case No. 1841, entitled 'Florence Pucay De Gomez, Elsie Pucay Kiwas and Muriel Pucay Yamane v.
Cypress Corporation,' which said counsel handled for the plaintiffs therein, hereinafter collectively
referred to as the Pucay sisters, the subject property was levied to satisfy the lien for attorney's fees
in the amount of P10,000. The said property was scheduled to be sold at public auction on August
11, 1981.

"Four days prior to the auction sale, [respondent] filed a Third-Party Claim with the Office of the
Provincial Sheriff to stop the public auction on the ground that the subject property is conjugal
property and, therefore, should not be held answerable for the personal obligation of the Pucay
sisters. However, the Sheriff proceeded with the auction sale despite [respondent's] protest. The
subject property was sold to spouses Josephine [and] Henry Go (or [petitioners]) as highest bidder.
No redemption having been made during the one-year period, a Final Sheriff's Certificate of Sale
was eventually issued on August 26, 1982 conveying and transferring the said property to
[petitioners].
"On September 4, 1984, [respondent] filed a Complaint with the Regional Trial Court of Baguio City,
docketed as Civil Case No. 417-R, against [petitioners] and Sheriff Melgar for annulment and
cancellation of auction sale upon the same ground stated in the abovementioned third-party claim.
Citing the Order of the Regional Trial Court of Baguio City, Branch V in LRC Case No. 2288, which
ordered the cancellation of TCT No. 12491 and directed the Register of Deeds to issue new title in
the name of Josephine Go x x x, [petitioners] moved to dismiss the complaint on the ground of res
judicata. In the Order dated November 28, 1984, the motion was denied by the trial court.
"In their Answer filed on December 10, 1984, [petitioners] denied the material allegations of the
complaint and interposed the following special affirmative defenses: that the cause of action was
barred by prior judgment; that [respondent] has not pursued any lawful remedy to annul the
execution proceeding; that there is no flaw or irregularity in the auction sale; and that since the
execution sale was made in accordance with Section 21, Rule 39 of the Revised Rules of Court, it is
deemed final and any irregularity committed in the course thereof will not vitiate its validity.
"On December 28, 1984, Muriel likewise lodged a Complaint for Damages, docketed as Civil Case
No. 505-R, against [petitioners] and Atty. Guillermo De Guzman alleging, in gist, fraud,
misrepresentation, manipulation and unlawful acts of the defendants in causing the levy of the
subject property with an estimated commercial value ofP200,000 as against a charging lien in the
amount of P10,000.
"In its May 27, 1985 Order, the trial court ordered the joint hearing of Civil Cases Nos. 417-R and
505-R. On August 30, 1985, Muriel was declared non-suited for failure to appear in the hearing
despite due notice. As a consequence, Civil Case No. 505-R was dismissed on October 15, 1985." 5
In its Decision6 dated March 25, 1998, the Regional Trial Court (RTC) of Baguio City, Branch 4, held
that the subject parcel of land was the paraphernal property of the late Muriel Pucay Yamane -spouse of respondent -- and was not their conjugal property. The appearance of his name on the
Transfer Certificate of Title (TCT) was deemed to be merely descriptive of the civil status of the
registered owner, his late wife. Hence, finding that he had no legal standing to question the auction
sale or to pray for its annulment or cancellation, the RTC dismissed the case for lack of merit.
Upon receipt of the RTC Decision on April 8, 1998, respondent filed a Motion, 7 in which he prayed
that he be allowed to file his Motion for Reconsideration of the Decision, on or before May 30, 1998.
The trial court granted8his Motion; received the Motion for Reconsideration,9 which was filed on May
28, 1998; and eventually denied it in its Order dated June 5, 1998. 10 He then elevated the matter to
the CA on June 15, 1998.
Ruling of the Court of Appeals

The CA reversed the RTC's Decision. The Sheriff's Certificate of Sale dated August 12, 1981, and
the Final Sheriff's Certificate of Sale dated August 26, 1982, were declared null and void.
According to the appellate court, property acquired during marriage is presumed to be conjugal,
unless the exclusive funds of one spouse are shown to have been used for the purpose. That the
land was acquired during the spouses' coverture was sufficiently established by the TCT and the
Deed of Absolute Sale, both indicating that Muriel Pucay Yamane was "married to Leonardo
Yamane"; and by the undisputed testimony of the previous owner, Eugene Pucay. Because of
petitioners' failure to establish that the land in question had been acquired by Muriel using her
exclusive funds, the CA concluded that the contested land was conjugal property.
The appellate court further held thus:
"x x x [T]he disputed property being a conjugal property of [respondent] and his wife, and absent any
showing of some advantage or benefit that accrued to their conjugal partnership from the transaction
between the Pucay sisters and Atty. De Guzman, the public auction sale of the subject property in
favor of [petitioners] is null and void."11
Hence, this Petition.12
Issues
Petitioners submit the following issues for our consideration:
"I. The Court of Appeals gravely erred in taking cognizance of the appeal and in not
dismissing the same, despite the fact that the respondent failed to perfect his appeal within
the 15-day reglementary period set by the Rules of Court.
"II. The Court of Appeals gravely erred in declaring the subject property as conjugal property,
despite the existence of clear evidence showing that the subject property is the exclusive
paraphernal property of Muriel who, even during her lifetime, always claimed the said
property as her own exclusive paraphernal property and not as property co-owned with her
husband, the respondent herein.
1avvphil.net

"III. The Court of Appeals, assuming, ex grati argumenti, that the subject property is conjugal
property between respondent and Muriel, gravely erred in ruling that the same cannot
answer for the charging lien of Atty. Guillermo de Guzman in Civil Case No. 1841." 13
In the main, they posit two issues. They raise, first, the procedural question of whether the CA erred
in giving due course to respondent's lapsed appeal; and, second, the substantive issue of whether
the subject property is conjugal or paraphernal.
The Court's Ruling